Anger with Greece’s spendthrift shipowners on the rise

According to international analyses, at least €140 billion of shipping industry money has gone untaxed since 2002, a sum that would reduce Greece’s debts by almost half.
Photo: Bloomberg

by
Manfred Ertel

The Greek economy continues to suffer, but the country’s shipowners are spending as though there were no crisis. Once popular, Greece’s shipping companies are now widely scorned. There was a time when Greece’s shipowners adorned the covers of gossip magazines and ran football clubs, secure in the affection of millions of fans. But these days, men like Theodoros Veniamis, one of the richest shippers in the country, need personal protection. Many don’t leave home without it.

On the list of Greeks hated by their countrymen, shipowners have almost reached the top; only politicians are more reviled. They are threatened by radical leftist groups and physically attacked. There have been attempted kidnappings; in at least one case, a shipowner’s family paid millions in ransom.

Shipping magnates in Greece are considered greedy and unscrupulous. According to international analyses, at least €140 billion ($204 billion) of shipping industry money has gone untaxed since 2002, a sum that would reduce the critically indebted country’s financial obligations by almost half. In Switz­erland alone, there is thought to be up to €60 billion in Greek funds, mostly belonging to shipping companies. They were partly accumulated legally, thanks to a web of special regulations allowing tax exemptions for shipowners, and partly illegally, through tax evasion. In the past year, Viktor Restis, a shipping company owner, was arrested under suspicion of money laundering.

But that’s not all. Greece remains in crisis: unemployment stands at 27 per cent, tax revenues are stagnant and Athens is haggling with international lenders over a potential new debt cut. Meanwhile, shipping companies are expanding their fleets as if money were no object. Last year, they ordered 275 new ships worth almost €10 billion, more than any other country in the world. A similar sum was invested in the renovation of their fleet. In just the first weeks of this year, Greek shipping companies ordered 15 used and 19 new ships worth about €5 billion. It’s almost as if there hadn’t been a shipping crisis over the last several years.

‘Many ways to avoid taxes’

“We follow our own metabolism," Veniamis says. “We buy when the times are hard. It’s our recipe for success." Because many Greek shipping firms are family-owned – unlike the publicly owned corporations that make up much of their international competition – they can afford such a strategy, he says. “The money comes from our own pockets."

But when asked how that money arrived in his pocket, he becomes quiet. Veniamis, 63, runs the Golden Union Shipping Company, which has a fleet of 52 ships. He is ranked 51st on Lloyd’s register of the most influential shipowners. As the president of the Union of Greek Shipowners he also speaks for about 800 shipping families commanding 5000 freighters, container ships and tankers – the largest trade fleet in the world in terms of capacity.

When asked about tax evasion and the investigations into at least 46 shipowners, he is vague. In Germany too, there are “many ways to avoid paying taxes", Veniamis says. “We are competing with the entire world. But nowhere else are the businessmen as patriotic."

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And what about the so-called “Lagarde list", named after the former French finance minister, which lists over 2000 offshore accounts in a Geneva bank? Of the names on the accounts, more than 100 are suspected to belong to shipowners or their wives.

“Exceptions," says Veniamis – isolated incidents, in which private real estate or family property had been cycled through company balance sheets. They are black sheep, he says, of the kind that exist everywhere. Then he changes the subject and describes how his group supports 12,000 ailing families by sending them monthly grocery deliveries containing everything “from olive oil to croissants".

Generous government subsidies

Veniamis also doesn’t like to talk about the fact that almost all European countries subsidise their shipping companies in order to keep them competitive with those from the far east. The tonnage tax, which is standard worldwide, is one form of this support. It’s a kind of flat-rate tax, mostly dependent on the size and capacity of the ship, but not of its actual profits. The rate per tonne differs, but experts say there’s nowhere in the world where shipowners are as spared from financial burdens to the degree they are in Greece.

Greek shipping companies, and those that operate in the country, are nearly exempt from taxes or duties, and income from international business needn’t be taxed at all. Even when a ship is sold, the owner isn’t taxed. The opposition party Syriza recently counted a total of 58 special rules and demanded they be changed. “We have never had a different system," says Veniamis. “We pay taxes as private people just as others do."

Up to 7 per cent of Greece’s economic output depends on shipping, he says. The country’s merchant marine, he claims, employs more local officers per ship than Germany. But as it turns out, that means only about 30,000 Greeks, and the sailors’ union complains of a 70 per cent unemployment rate. The union also argues that, while Greek shipowners privately paid €15 million in taxes into the state coffers in 2012, the sailors paid over €55 million.

But now the shipowners are facing pressure. The government in Athens has extracted their approval to voluntarily double tonnage-tax duties, a move that is expected to translate into €140 million in tax revenues from the industry annually for the next three years.

The businessmen basked in the public praise ­generated by their compromise. But shipping com­panies believe the deal will only cost them €100 million a year, much lower than Finance Ministry expectations. And they’re asking for considerably more time to pay it.